… it is important at the outset to identify and define whatever fundamental concept appears wrapped up in the claim so that the subsequent analytical steps can proceed on a consistent footing. … With the pertinent abstract idea identified, the balance of the claim can be evaluated to determine whether it contains additional substantive limitations that narrow, confine, or otherwise tie down the claim so that, in practical terms, it does not cover the full abstract idea itself.

Alice at 18-19 (citations omitted).

In other words, according to the Supreme Court, for a claim to be not patent-eligible as an abstract idea, a claim must; 1) recite a fundamental concept; and 2) not contain additional substantive elements that narrow the claim to less than the entirety of the abstract idea.

The Supreme Court also made it clear that mere generic computer hardware or functions in a claim will not serve as substantive elements that narrow the claim beyond the abstract idea. “Furthermore, simply appending generic computer functionality to lend speed or efficiency to the performance of an otherwise abstract concept does not meaningfully limit claim scope for purposes of patent eligibility.” Alice at 27 (citations omitted).1 The Patent Trial and Appeal Board (PTAB) and various district courts have applied the framework articulated in Alice to invalidate many claims based on 35 U.S.C. §101. Notwithstanding Supreme Court precedent that “anything that is under the sun that is made by man” is patent-eligible2, the framework of Alice is being applied by the PTAB in an extremely broad manner to grant trials and possibly exclude wide swaths of subject matter as not patent-eligible.

While the framework defined in Alice has arguably provided some additional certainty to the issue of patent eligibility of computer related inventions, Alice, and subsequent cases, provide little guidance with respect to what constitutes “additional substantive limitations that narrow, confine, or otherwise tie down the claim so that, in practical terms, it does not cover the full abstract idea itself.” However, a recent decision by the Court of Appeals for the Federal Circuit (CAFC) has provided guidance with respect to this matter. In DDR Holdings, LLC v. Hotels.com, L.P., No. 2013-1505, 2014 WL 6845152 (Fed. Cir. Dec. 5, 2014), the CAFC appears to have articulated at least one example of when computer elements constitute substantive limitations that narrow a claim beyond an abstract idea recited in the claims. The CAFC noted that the claimed invention at issue in DDR “is necessarily rooted in computer technology to overcome a problem specifically arising in the realm of computer networks” (DDR at p. 20).

In DDR, the claims at issue were directed to dynamically creating a web page that allow a user to follow a merchants ad on a host site without leaving the host site. This prevents the merchant site from luring traffic away from the host cite. The CAFC focused on the problem solved by the claims and distinguished the problem from well- known business concepts.

In more plain language, upon the click of an advertisement for a third-party product displayed on a host’s website, the visitor is no longer transported to the third party’s website. Instead, the patent claims call for an “outsource provider” having a web server which directs the visitor to an automatically-generated hybrid web page that combines visual “look and feel” elements from the host website and product information from the third-party merchant’s website related to the clicked advertisement. In this way, rather than instantly losing visitors to the third-party’s website, the host website can instead send its visitors to a web page on the outsource provider’s server that 1) incorporates “look and feel” elements from the host website, and 2) provides visitors with the opportunity to purchase products from the third-party merchant without actually entering that merchant’s website.

DDR at 20-21.

While [the “store within a store”] concept may have been well-known by the relevant timeframe, that practice did not have to account for the ephemeral nature of an Internet “location” or the near-instantaneous transport between these locations made possible by standard Internet communication protocols, which introduces a problem that does not arise in the “brick and mortar” context. In particular, once a customer enters a physical warehouse store, that customer may encounter a kiosk selling third party cruise vacation packages. There is, however, no possibility that by walking up to this kiosk, the customer will be suddenly and completely transported outside the warehouse store and relocated to a separate physical venue associated with the third-party. … Unlike the claims in Ultramercial, the claims at issue here specify how interactions with the Internet are manipulated to yield a desired result—a result that overrides the routine and conventional sequence of events ordinarily triggered by the click of a hyperlink.

DDR at 21 and 22.

In DDR, we see an appreciation of how computer processes can be used to solve business problems and an acknowledgment that such a result is patent-eligible. While mere automation of a well-known concept does not necessarily rise to the level of patent-eligible subject matter, using a computer to address an unresolved new business problem will give rise to patent eligible subject matter, according to the CAFC. While this sounds like conflation of section §101 patent eligibility with §102/103 prior art issues, it is the current state of the law.

DDR appears to place a limit on the application of Alice. In order to survive PTAB scrutiny, patent drafters should emphasize the problems resolved by computer related inventions and provide evidence that such problems are new and unresolved. Of course, only time, and the courts, will tell whether other limits should be placed on the application of Alice.